The average cost of a London home fell by 0.5 per cent in September to £526,000, according to official figures.
Across the UK, house price growth accelerated to 2.9 per cent in the year to September 2024 — taking the average cost of a UK home to £292,000.
The Office for National Statistics (ONS) data is based on sold figures, including cash and mortgaged purchases, so is considered one of the most comprehensive of house price surveys yet there is a lag in reporting time so any fallout from the Autumn Budget is not reflected in figures released today.
In recent weeks, agents have voiced clients’ concerns about the Budget and then the resulting fallout, with “more caution and heavier negotiation over available properties, despite the recent drop in mortgage rates,” said Jeremy Leaf, north London estate agent and former RICS chairman.
“Worries remain about the pace of further falls in rates and increases in inflation as buyers want to ensure they have a sufficient buffer against potentially rising costs,” added Mr Leaf.
The annual pace of UK price growth recorded by the ONS ticked upwards from 2.7 per cent in the year to August.
Average house prices increased in England to £309,000 (a 2.5 per cent annual increase), in Wales to £217,000 (0.4 per cent), and in Scotland to £198,000 (5.7 per cent), in the 12 months to September 2024.
The average house price for Northern Ireland was £185,000 between April and June, up by 6.4 per cent from a year earlier.
The figures were released as the ONS said that Consumer Prices Index (CPI) inflation accelerated to 2.3 per cent in October, from 1.7 per cent in the previous month.
Inflation was higher than expected for the month, with economists having predicted an increase of 2.2 per cent.
David Hollingworth, associate director at L&C Mortgages said the jump in inflation could “bring further headaches for mortgage borrowers”.
He said: “Although the rate lifting above target is not a shock, at 2.3 per cent it is a little higher than many had expected. That will pour more cold water on the prospects for another cut to (the Bank of England) base rate to come next month, which will be disappointing news for those on a variable or tracker rate mortgage.”
“Although still expected to fall, the growing expectation has been for rates to fall more slowly and not as far as previously anticipated.”
Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners said: “Homeowners and first-time buyers are likely to be disheartened by the latest inflation reading, as it reduces the likelihood of a third rate cut this year.
“The average cost of a new fixed rate mortgage has been creeping up since the Budget, as lenders price their products to reflect expectations that interest rates may stay higher for longer.
“With the latest inflation reading confirming that inflation has not only risen back above the (Bank of England’s) two per cent target but has come in higher than expected, it means that mortgage borrowers could have more pain to contend with if more lenders adjust their rates upwards.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Further rate reductions are more likely next year than this one, with swap rates (which are used by lenders to price mortgages) rising on the back of today’s inflation figures.
“However, while inflation rose more than expected, it’s still only just above the two per cent target and fluctuations are not unexpected.”
Nick Leeming, chairman of estate agent Jackson-Stops, said: “Despite the base rate being cut to 4.75 per cent, this reduction is not yet feeding through into mortgage rates due to external headwinds.
“But the market should take confidence from the fact that activity levels are up year-on-year.”
ONS figures also showed that average UK private rents increased by 8.7 per cent in the 12 months to October.
Getting good news about your rent is about as common as discovering your housemates have washed up for you, or your landlord suggesting you get a dog
This was up from 8.4 per cent annual price growth in September, but below a record high of 9.2 per cent in March.
Sarah Coles, head of personal finance at Hargreaves Lansdown said: “Getting good news about your rent is about as common as discovering your housemates have washed up for you, or your landlord suggesting you get a dog.
“It means for many, the only way out of the endless cycle of rising costs is to buy, but this is far easier said than done when rents absorb so much of your income.”
Nathan Emerson, CEO at Propertymark, said: “Selling up altogether or turning to the short-term letting market is becoming a more attractive option for landlords due to the challenging legislative changes and increased financial liabilities they face.”
